Question

Calculate the expected return on stock of Gamma Inc.:

State of the economy | Probability of the states | Percentage returns |
---|---|---|

Economic recession | 18% | -5.0% |

Steady economic growth | 49% | 5.3% |

Boom | Please calculate it | 9.7% |

Answer #1

Expected return is the return that is calculated by taking into consideration all the possible outcomes which can affect the return for a particular stock or portfolio. Expected return is calculated by considering all the possible outcomes and multiplying them with their probabilities, after this we will sum up all the figures to get the expected return.

To calculate the probability of the state of Boom, we will sum up all the probabilities and then subtract them from 1.

Hence the probability for boom = 1 - 0.18 - 0.49

= .33

= 33%

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Question 1
a.
Calculate the expected return on stock of Gamma Inc.:
State of the economy
Probability of the states
Percentage returns
Economic recession
28%
-7.4%
Steady economic growth
35%
2.2%
Boom
Please calculate it
14.6%
Round the answers to two decimal places in percentage
form.
b.
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
18%
2%
Steady economic growth
22%
8%
Boom
Please calculate it
14%

Calculate the expected return on stock Gamma Inc.:
State of the economy Probability of the States percentage
returns
Economic recession 14% -5.2%
Steady economic growth 44% 2.2%
Boom please calculate it 10.5%
Round answer to two decimal places in percentage form

Question 1 (1 point)
a.
Calculate the expected return on stock of Gamma Inc.:
State of the economy
Probability of the states
Percentage returns
Economic recession
15%
-5.2%
Steady economic growth
30%
2.7%
Boom
Please calculate it
13.3%
Round the answers to two decimal places in percentage
form.
b.
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
26%
-10%
Steady economic growth
28%
10%
Boom
Please calculate it...

Calculate the expected standard deviation on stock:
State of the economy Probability of the states Percentage
returns
Economic recession 23% -5%
Steady economic growth 25% 10%
Boom Please calculate it 14%

Question 2 (1 point)
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
21%
2%
Steady economic growth
30%
9%
Boom
Please calculate it
11%
Round the answers to two decimal places in percentage
form

What is the variance of the expected returns on this stock?
State of the Economy
Probability
Expected Return
Boom
.70
24
%
Recession
.30
6
%
Multiple Choice
48.75%
61.53%
70.03%
68.04%
52.75%

What is the expected
return on this stock given the following information?
State of the
Economy
Probability
E(R)
Boom
0.4
15
%
Recession
0.6
-20
%
Multiple Choice
-8.07 percent
-6.00 percent
-5.20 percent
-5.70 percent
-7.69 percent
A portfolio consists
of the following securities. What is the portfolio weight of stock
A?
Stock
#Shares
PPS
A
200
$
48
B
100
$
33
C
250
$
21
Multiple Choice
0.389
0.451
0.336
0.529
0.445
What is the variance
of...

Consider the following
information:
Rate of Return if State Occurs
State of
Probability of
State
Economy
of
Economy
Stock A
Stock B
Recession
.23
.025
â€“.28
Normal
.58
.105
.18
Boom
.19
.170
.41
Requirement
1:
Calculate the expected return for the two stocks.
(Do not round intermediate calculations.
Enter your answers as a percentage rounded to 2
decimal places (e.g., 32.16).)
Expected
return
E(RA)
%
E(RB)
%
Requirement
2:
Calculate...

State of Economy Probability of State of Economy Return of Stock
A if State Occurs Return of Stock B if State Occurs
Recession 0.30 -0.10 0.08
Normal ? 0.20 0.15
Boom 0.20 0.30 0.20
1) Suppose you have $50,000 total. If you put $30,000 in Stock A
and the remainder in Stock B, what are the portfolio returns in
each state?
2) Suppose you have $50,000 total. If you put $30,000 in Stock A
and the remainder in Stock B,...

Rate of Return if State Occurs
State of Economy
Probability of
State of Economy
Stock A
Stock B
Stock C
Boom
0.30
50.0%
12.0%
20.0%
Average
0.45
15.0%
-5.0%
6.0%
Recession
0.25
-8.0%
2.0%
-3.2%
Your portfolio manager has invested 30% of your money in Stock
A, 50% in Stock B, and the rest in Stock C.
1. What is the correlation coefficient between Stocks B and
C?
2. What is the standard deviation of your portfolio?
Hint: Instead of...

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